Purchasing your first La Crescenta single-family rental property can be an enjoyable experience. But compared to any investments, there are certain risks involved. To ensure that your first investment property purchase in La Crescenta becomes as rewarding as you hope it will be, there are many factors to take into account before you buy. For example, you’ll need the answers to questions like whom do you want to rent to? What type of rental property will you take priority? How will you finance your purchase? In what follows, we’ll address these concerns and other important information you’ll need to know to make buying your first rental property a rewarding experience.
Define Your End Goal
When buying your first single-family rental home, one of the first considerations you should make is to set clearly defined end goals. Before you start your property search, you should take the opportunity to know what qualities you are seeking in your investment property. For instance, you might be searching for properties in a particular area with a specific number of bedrooms or minimum square footage. You can also direct your attention to a specific renter demographic, such as college students or retirees. You can refine your search criteria and locate potential properties more quickly by being aware of the specifics.
Prepare Your Finances
Aside from determining what qualities you are looking for in a property, it is advisable to prepare financially before you get an investment property. Industry experts recommend paying down personal debt and saving for a down payment before starting your property search. Reduced personal debt can help you to qualify for more favorable loan rates, while nearly all mortgage loans for an investment property will require a 20% down payment. Another critical step is to arrange finance in advance but pay attention to high-interest loans or mortgage products that seem too good to be true. By prequalifying with a trusted mortgage lender, you will be prepared to grab investment opportunities as they emerge. By prioritizing financial readiness, you will increase your chances of buying that rental property with confidence when the time comes.
Crunch the Numbers
After taking these critical preliminary steps, the search for the right property begins. During your search, it’s crucial to keep in mind that you should run a series of numbers on each potential property, including your margins, operating expenses, and expected return. This is where most beginner investors make costly mistakes.
New investors must never forget to include all the expenses related to purchasing and preparing the rental property for lease, as well as ongoing property management, maintenance, and vacancy costs. Industry experts suggest a margin of 10% and a 6% return in your first year means you have a profitable investment.
Stay Objective
You need to bear in mind that an investment property is just that, an investment. Getting attached to a particular property or allowing emotions to dictate your choices is not a good idea. In addition, the property you buy is not necessarily one you would ever live in yourself. Industry experts advise buying low-cost properties in high-demand areas for your first investment. But avoid fixer-uppers unless you are a highly skilled home remodeling expert or know a credible contractor who can perform the work for less than the going rate. Your first single-family rental property should be regarded as the first step toward a long and profitable investment career rather than the end goal. Thus, you can keep yourself on track and your investment properties in the black.
Design a Management Strategy
And lastly, be aware that purchasing a rental property is just the first step. You need a proactive management strategy to guarantee a return on your investment. A La Crescenta property management company can be helpful in this scenario. As local market experts, property managers can help you find off-market investment properties, analyze market conditions, set rental rates, and much more. As more successful investors will tell you, the right property management company is a vital partner in fruitful rental property investing.
If you have found your perfect investment property, ensure you find the best La Crescenta property management team. Contact Real Property Management Vision at 818-233-8789 today.
Originally Published on March 13, 2020
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